Western Securities "Increase profits without increasing revenue": After acquiring Guorong Securities, why is it difficult to realize "1+1>2"?

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In 2025, Western Securities’ performance was dragged down by a nearly 60% plunge in revenue from Western Futures, resulting in a “profit increase without revenue increase” trend. Proprietary trading declined against the grain and diverged from industry trends. After acquiring Guorong Securities, its contribution was also limited, failing to unlock synergy effects.

In 2025, A-shares rallied, and securities firms’ performance generally rose. Among them, merger-driven firms performed especially well: Guotai Haitong jumped to the top in multiple business lines, narrowly behind CITIC Securities; Guolian Minsheng’s performance growth led the pack, becoming the biggest dark horse.

However, after Western Securities acquired Guorong Securities, it still looked weak: revenue fell by 10.84%. Although net profit attributable to shareholders grew by 24.97% against the trend, the shrinkage of core proprietary trading business is a cause for concern.

Futures subsidiary dragging revenue

The financial report shows that in 2025 Western Securities recorded operating revenue of 5.985 billion yuan, down 10.84% year on year; net profit attributable to shareholders was 1.754 billion yuan, up 24.97% year on year.

In this regard, Western Securities explained that it was mainly because revenue and costs from its bulk commodities trading business declined year on year. The announcement shows that, affected by changes in industry policies and the decline in market interest rates, its wholly owned subsidiary Western Futures faced performance pressure, with operating revenue of 1.063 billion yuan, down sharply by nearly 60% from 2.625 billion yuan in 2024; net profit was 15.3353 million yuan, down 38% from 24.7886 million yuan in the same period.

Independent financial commentator Guo Shiliang told a reporter from the International Financial News that Western Securities’ “profit increase without revenue increase” may stem from strong timing ability—disposing of assets at high levels to boost profits—but such profits lack sustainability; the sudden drop in revenue highlights a scale bottleneck and operating pressure. In the future, it will need to focus on consolidating revenue scale, expanding business capabilities, and enhancing overall competitiveness.

In terms of specific businesses, Choice data shows that in 2025 Western Securities’ net revenue from brokerage business rose 44% year on year to 1.361 billion yuan; net revenue from investment banking rose 45% year on year to 405 million yuan; net revenue from asset management slightly declined 5% year on year to 1.59 billion yuan; net revenue from proprietary trading slightly declined 2% year on year to 2.433 billion yuan; and credit business turned from loss to profit, reaching 1.02 billion yuan.

Brokerage and proprietary trading are the two major revenue pillars of Western Securities. With a favorable market in 2025, brokerage income at securities firms generally increased, and Western Securities’ growth rate was among the leading ones. However, proprietary trading did not increase and instead fell, diverging from industry trends—among 25 securities firms whose performance has been disclosed, 11 saw proprietary trading net income growth exceeding 40%, while Western Securities clearly lagged behind.

Performance divergence after the merger

In 2025, the initial effect of the merger wave among securities firms began to show, but differentiation was clear. Guotai Haitong’s net profit attributable to shareholders surged by nearly 114%, with brokerage and credit businesses catching up to CITIC Securities; Guolian Minsheng’s net profit attributable to shareholders skyrocketed by 405%, with the growth rates of net income from brokerage, investment banking, and proprietary trading reaching 193%, 165%, and 254%, respectively, making it the biggest dark horse.

Analysts point out that merger-driven efficiency and value enhancement among securities firms comes from three effects: first, scale effect—resources such as capital, clients, and channels are concentrated, unit costs are diluted, and bargaining power is strengthened; second, synergy effect—business lines such as brokerage, investment banking, and proprietary trading complement and reinforce each other, with cross-selling amplifying revenue and license utilization improving; third, integration effect—by optimizing talent, systems, and culture to make up for shortfalls, it achieves a leap in capability from a “physical merger” to “chemical integration.” Ultimately, the revenue structure becomes more balanced, risk resilience improves, and overall profitability grows significantly.

Western Securities is also a merger case, yet it is “profit increase without revenue increase.”

In September 2025, Western Securities officially took controlling stake in Guorong Securities (holding 64.6%), expanding its business departments to 165. Although the footprint expanded, the contribution remained limited: in 2025, Guorong Securities’ revenue plummeted from 1.119 billion yuan in 2024 to 249 million yuan, while net profit shrank from 86 million yuan in 2024 to 76 million yuan, dragging down overall performance.

As for the performance problem, the reporter from the International Financial News sent a letter to Western Securities seeking an interview, but received no response. How to release the “1+1>2” effect remains a question to be answered.

Reporter Zhu Denghua

Text Editor Chen Si